What is the 200-day moving average (200dma)?

The 200-day moving average commonly expressed as 200DMA is a very popular technical indicator among traders but more among investors to analyze the underlying trend. It is an arithmetic average of the last 200 days closing price. Some prefer open, high or low prices but most widely used is the closing price.

What does 200dma mean?

Widely followed – 200DMA is so widely used that a stock or index when it touches 200DMA, the bears start covering their short positions or bulls starts accumulating. It provides the much-needed change in demand-supply change for a reversal. Clubs well with other averages – 200DMA is a laggard trend identifier.

What is a 200-day SMA?

As a very long-term moving average, the 200-day SMA is often used in conjunction with other, shorter-term moving averages to show not only the market trend but also to assess the strength of the trend as indicated by the separation between moving average lines. For example, comparing the 50-day SMA and 200-day is relatively common.